Marketing Madness

The Marijuana Marketing Industry is Ripe For Fraud

Learn These Tips to Death with Online Advertising Fraud


In 2000 or so, I created my first publication ADBUMB –which was called by Anne Holland, the founder Marijuana Business Daily, called her favorite publication at the time. I created it because in the three years of online marketing I had done, I had been scammed dozens of times. Now almost 20 years later, I see the same problems creeping into the Marijuana Marketing Industry – and much worse.


With all the money out there in Marijuana, dispensaries are buying ads left and right, spending millions often without any idea what they are doing. Little do many know, that as much as half of all influencer marketing is fake, and that a recent study claims 1/3 of all online advertising is just plain fraudulent. Worse, because of the incestuous nature of the business, where people give each other business, broker it to other businesses, and lie about their sources – it’s more than likely at least 1/3 of their ad spend will be on fraud.

Just this past month, a huge operation detailed Wednesday by FBI officials at the International Conference on Cyber Security, targeted the Methbot/3ve fraud scheme. The ad-fraud ring defrauded digital advertisers and web publishers out of more than $30 million by charging marketers for access to internet users who didn’t actually exist, according to the U.S. Department of Justice. Advertising fraud, already a billion-dollar problem, is set to cost the ad industry $44 billion by 2022.

And successful attacks have ramifications for more than just ad companies. In November, Google removed from its Play Store 22 applications that appeared legitimate, but actually installed malicious software that opened an invisible window that repeatedly clicked on ads without a user’s knowledge. One app, dubbed Sparkle Flashlight, was downloaded more than 1 million times.

Analyze your campaign data Once you have data coming in from your  vendors, it’s important to start auditing your campaigns for signs of fraud. They will provide you with metrics like viewability and invalid (or suspicious) traffic levels. Using this information, you can optimize your campaigns by shutting down low-quality publishers and placements. You can then reallocate your budget to higher-quality sites.

Avoid easy-to-fake campaign goals like impressions and clicks. Those are merely proxy metrics for actual business outcomes, like signups, sales and subscriptions. So it’s important to remember that. Focus instead on actual business metrics. If you are using any sort of auto-optimization algorithm in your DSP, avoid click-based goals. Instead, go for more concrete goals like conversions. It’s too easy for algorithms to get tricked by placements affected by click bots.

Embrace a defensive buying mindset. Being defensive means not trusting open or unmonitored inventory. It essentially means being a little paranoid. For example, it can mean avoiding unmonitored open exchange inventory altogether, and instead, pursuing more reputable publishers, like those with private marketplaces. Another way to be defensive is to avoid publishers with non-transparent inventory or those that bundle multiple sites together.

Refuse to pay for fraudulent impressions by blocking payment for fraud. No marketer should have to pay for fraudulent impressions, period. By taking a zero-tolerance approach to ad fraud, you, as a marketer, send a message to vendors that it’s unacceptable. And if it continues, you have to eventually ask yourself if it makes sense to continue fighting. Without the support of your DSP, it might make more sense to explore other partners or channels.

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Pesach Lattin

Pesach "Pace" Lattin is one of the top experts in interactive advertising, affiliate marketing. Pace Lattin is known for his dedication to ethics in marketing, and focus on compliance and fraud in the industry, and has written numerous articles for publications from MediaPost, ClickZ, ADOTAS and his own blogs.

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